The $1bn crypto fund.
El Salvador’s Bitcoin bond is the next step in the country’s exciting foray into cryptocurrency. Typically, governmental financial news is met with little interest, but with such a new and never-seen-before venture as this, the bond has been hotly anticipated for months. This article is exploring the bond’s launch, what it means for the future of Bitcoin in El Salvador, and its impact on Bitcoin City.
THE LAUNCH OF THE BOND
The bond’s launch was initially planned for last month, however with the ongoing geopolitical crisis and resultant unfavorable market conditions, El Salvador’s government has decided to postpone the launch until later in the year. While a difficult decision to make, it was done in an attempt to ensure maximum success when the bond does eventually launch.
The ultimate goal of the $1billion bond is to finance the monumental and historic Bitcoin City, as well as invest a significant portion of the money (half, to be exact) into Bitcoin itself. However, it’s also an opportunity for somewhat separating the country’s finances from the U.S. dollar, for gaining a pool of foreign capital, and for allowing the country’s own citizens to invest in its future.
THE IMPACT ON BITCOIN CITY
Unfortunately, as the bond is due to fund the construction of Bitcoin City, it seems that the city is on hold until the bond can be realized.
The city was intended to be something of a haven for El Salvador’s citizens. Residential and commercial developments, restaurants, and transport links are among the infrastructure that has been planned, while financially residents would benefit from tax breaks and geothermal power throughout the city’s limits (thanks to the volcano the city is due to be built upon). As well as being funded by the bond, the city is intended to be a space wherein Bitcoin can be mined by harnessing the volcano’s geothermal power to boost the country’s crypto holding.
The ambitious plans were put in place in an attempt to boost the local economy and attract foreign investment, but they hinge on the success of the bond. As a result, the city’s future is uncertain.
THE FUTURE OF BITCOIN IN EL SALVADOR
The use of Bitcoin in El Salvador is still incredibly new – it was only made legal tender within the last nine months. There have of course been obstacles in the way at times – the delayed launch of the Bitcoin bond being the latest – but that is true of almost every new venture. As such, it’s hard to know precisely what the future of the cryptocurrency in the country may be, but moves such as this suggest something of faith in its longevity.
The bond is a sign of El Salvador moving away from the rigidity of traditional finance options, and presents an opportunity for cryptocurrency to step into the mainstream financing space, on a global scale. While El Salvador is something of a test subject for using cryptocurrency as a primary currency option, it may well be the example that is set for other countries to follow in the years that come. The saying goes, ‘Fortune favors the brave’, and only time will tell if the country’s bold move does indeed pay off.
As was noted, it will be some time before the official launch of the bond, and thus some time before the full effects may be seen. But, in any case, the move is a monumental moment for the history of El Salvador. One thing that does feel certain is that El Salvador is only just getting started when it comes to Bitcoin and cryptocurrency.
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